How do you pick the next stock to invest in? One way would be to spend days of research browsing through thousands of publicly traded companies. However, an easier way is to look at the stocks that smart money investors are collectively bullish on. Hedge funds and other institutional investors usually invest large amounts of capital and have to conduct due diligence while choosing their next pick. They don’t always get it right, but, on average, their stock picks historically generated strong returns after adjusting for known risk factors. With this in mind, let’s take a look at the recent hedge fund activity surrounding Amalgamated Bank (NASDAQ:AMAL).
Is AMAL a good stock to buy now? Amalgamated Bank (NASDAQ:AMAL) shares haven’t seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 9 hedge funds’ portfolios at the end of the third quarter of 2020. Our calculations also showed that AMAL isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks). The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Magenta Therapeutics, Inc. (NASDAQ:MGTA), Ituran Location and Control Ltd. (NASDAQ:ITRN), and City Office REIT Inc (NYSE:CIO) to gather more data points.
Video: Watch our video about the top 5 most popular hedge fund stocks.
If you’d ask most shareholders, hedge funds are seen as worthless, old investment tools of yesteryear. While there are over 8000 funds in operation today, Our experts choose to focus on the masters of this club, around 850 funds. Most estimates calculate that this group of people manage most of the hedge fund industry’s total asset base, and by watching their unrivaled picks, Insider Monkey has revealed a few investment strategies that have historically surpassed Mr. Market. Insider Monkey’s flagship short hedge fund strategy outrun the S&P 500 short ETFs by around 20 percentage points per year since its inception in March 2017. Our portfolio of short stocks lost 13% since February 2017 (through November 17th) even though the market was up 65% during the same period. We just shared a list of 6 short targets in our latest quarterly update .
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Now we’re going to take a gander at the fresh hedge fund action surrounding Amalgamated Bank (NASDAQ:AMAL).
Do Hedge Funds Think AMAL Is A Good Stock To Buy Now?
At third quarter’s end, a total of 9 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the second quarter of 2020. Below, you can check out the change in hedge fund sentiment towards AMAL over the last 21 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey’s hedge fund database, Adage Capital Management, managed by Phill Gross and Robert Atchinson, holds the number one position in Amalgamated Bank (NASDAQ:AMAL). Adage Capital Management has a $17.2 million position in the stock, comprising less than 0.1%% of its 13F portfolio. Sitting at the No. 2 spot is Israel Englander of Millennium Management, with a $1.6 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Remaining peers that are bullish consist of Farnum Brown and Adam Seitchik’s Arjuna Capital, D. E. Shaw’s D E Shaw and Ken Griffin’s Citadel Investment Group. In terms of the portfolio weights assigned to each position Arjuna Capital allocated the biggest weight to Amalgamated Bank (NASDAQ:AMAL), around 0.8% of its 13F portfolio. Adage Capital Management is also relatively very bullish on the stock, setting aside 0.04 percent of its 13F equity portfolio to AMAL.
Since Amalgamated Bank (NASDAQ:AMAL) has experienced declining sentiment from the smart money, we can see that there is a sect of hedge funds that elected to cut their entire stakes by the end of the third quarter. Interestingly, Anton Schutz’s Mendon Capital Advisors said goodbye to the biggest position of all the hedgies monitored by Insider Monkey, comprising close to $0.2 million in stock, and Peter Muller’s PDT Partners was right behind this move, as the fund dropped about $0.2 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Amalgamated Bank (NASDAQ:AMAL) but similarly valued. We will take a look at Magenta Therapeutics, Inc. (NASDAQ:MGTA), Ituran Location and Control Ltd. (NASDAQ:ITRN), City Office REIT Inc (NYSE:CIO), Blink Charging Co. (NASDAQ:BLNK), Seneca Foods Corp (NASDAQ:SENEA), Alpha and Omega Semiconductor Ltd (NASDAQ:AOSL), and China Distance Education Hldgs Ltd (NYSE:DL). This group of stocks’ market valuations match AMAL’s market valuation.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 9.7 hedge funds with bullish positions and the average amount invested in these stocks was $29 million. That figure was $22 million in AMAL’s case. Magenta Therapeutics, Inc. (NASDAQ:MGTA) is the most popular stock in this table. On the other hand China Distance Education Hldgs Ltd (NYSE:DL) is the least popular one with only 3 bullish hedge fund positions. Amalgamated Bank (NASDAQ:AMAL) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for AMAL is 50.6. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 32.9% in 2020 through December 8th and still beat the market by 16.2 percentage points. A small number of hedge funds were also right about betting on AMAL as the stock returned 27.5% since the end of the third quarter (through 12/8) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.